The Chair research programme is cross-disciplinary in nature, covering the managerial and macroeconomic issues raised by the management of organisations based on creating value from intellectual capital.
The managerial perspective at microeconomic level
R&D and innovation capabilities
R&D and innovation are now essential levers for organisational performance. In itself, innovation is not a new issue, but what is new is its accelerating importance and widespread introduction into all organisations, including non-commercial ones. The question we are asking is this: what are the specialist management skills that must be defined in order to manage and create value from intellectual assets already created or yet to be created in the knowledge economy? What effect is the emergence of intellectual assets likely to have on the conditions governing value appropriation (Teece, 2000) by companies and organisations? Which new conditions of competition and new business models are they likely to encourage to the point of emergence?
According to recently published data, investment in information technology and associated organisational processes represents the largest element of intellectual capital investment in complex economies (nearly 45% of the total, or 4.5% of GDP, in the case of the USA, where total investment for 2003 is estimated at $1,085 billion), which is considerable. It is considerable not only in terms of the large amounts allocated, but also in the extent of expectations regarding the impact on GDP growth and value creation at the microeconomic level.
This is the reason why CIGREF, which has been interested in this issue since 2000, included it in its CIGREF 2010 action programme, and created its Cercle de l’immatériel (Intellectual Capital Circle) as a benchlearning community for information systems departments (ISDs). A methodological structure is also available now, and a European-level action programme is in preparation as part of Euro-CIO (Bounfour, Epinette 2006; CIGREF 2006a and 2006b).
But the extent of the challenges is not only macroeconomic, but also microeconomic, and – as the Lévy-Jouyet Commission underlined – involves the major transition to value creation models, with intellectual capital at their heart. The ubiquitous nature of intellectual capital demands a profound sea change in our thought processes and action methods. We may think initially and instinctively of IS, but we must also include other key resources, such as R&D, marketing, education and advertising, and incorporate these into the dynamic spiral of intellectual capital.
For ISDs in particular, the challenges are certainly not small, and require a fundamental re-examination of their agendas for thought and action. For example, in a digital economy operating increasingly as a ‘value constellation’ (Ramirez, 1999), it is becoming clear that the function of the ISD is moving towards that of an intelligence architect, and further away from that of a manager of physical capabilities. Similarly, the trend of organisations themselves towards the digital world calls for a complete overhaul of working methods and incentive methods. Lastly, against this same background, the issue of reporting – including reporting on the intellectual capital of companies – is emerging in a new light, as DSIs are required to work more and more closely with finance departments and other operational and support functions.
Structural capital and intellectual property rights (patents, brands, software, image and reputation)
Structural capital – which includes autonomous intellectual assets (Bounfour, 2003) – is a major focus for action amongst companies. It naturally includes immediate secondary market assets (patents, brands and standard software), but also those with no direct value creation potential in such a market (custom-made methods and software, for example). The interaction between these resources and those of a more tacit nature – the innovative abilities of a company – has led to the emergence of specific knowledge management practices. Unsurprisingly, at the heart of this interaction lie a reconfiguration of the legal framework governing intellectual property rights and the emergence of new management practices (such as those relating to the definition of new incentive systems for company employees in the context of today’s much more distant contractual relationships). Patents, brands and ‘joint assets’ (those created within cooperative networks and communities, for example) must be analysed in new ways in light of changes in the competitive environment and the emergence of new extra-organisational practices, such as those focused on ‘copyleft’.
There is (still) no such thing as organisation without the involvement of men and women as contributors to the value creation process. In this instance, the approach will be focused on the conditions under which human capital is created and generates value in the intellectual economy. Key areas of interest will include incentive factors and the technical aspects of creating value from this type of capital (impairment of human capital?).
Management reporting and intellectual capital management
The issue of reporting is central to the problem of intellectual capital, so companies rich in such assets are more disadvantaged by an asymmetry of information relative to their external stakeholders, and particularly the financial markets (Lev, 2001). This is the reason behind the development of a set of initiatives intended to create a methodological framework. One such is the RICARDIS Report published by the European Commission Directorate-General for Research in 2006. From an analytical point of view, intellectual assets pose formidable reporting problems, as result of their combinatory and often entangled nature, volatility and risk (Hand and Lev, 2003). Hence the importance of achieving dynamic interaction between a horizontal language of reporting and a vertical language of value (which provides the grammar). The systematic introduction of impairment testing by IFRS (IFRS 3, 36 and 38 in particular) is a clear illustration of the unstable nature of intellectual assets, and, as a result, the importance of moving beyond current standards.
Public-sector intellectual asset management
One of the major contributions made by the Lévy-Jouyet report of 2006 has been to spark discussion of the State’s intellectual asset base, leading to the recent creation of a dedicated government agency in France: the Agence du Patrimoine Immatériel de l’Etat (APIE). The fact that the issue is being addressed in such terms is in itself innovative. The fact of establishing a new agency dedicated to managing such assets is another innovation. In practical terms, the terrestrial radio frequency spectrum, digital resources and cultural heritage are all key elements of the publicly-owned intellectual asset base. Recent initiatives introduced by the Musée du Louvre to leverage its brand for the purpose of creating value provide an excellent illustration. In any event, managing the public-sector intellectual asset base requires the emergence of new approaches to managing these assets; hence the creation in France of an agency within which to discuss and research this important issue.
The social perspective: socio-economic systems
A number of topics could be considered in this section, and from many points of view, they are the counterparts of those to be developed at the microeconomic level.
Evaluating new forms of organisation – networks, communities and organisational groups – using different socio-economic systems
This is an important issue, and one not given sufficient consideration in intellectual capital management literature. Organisational capital is now seen as a problem for companies, but is still addressed from a narrow perspective: the transaction perspective, for example, with questions such as how organisational capital can help companies to create more value, especially in financial markets. However, it is important to consider this issue at a much deeper level by evaluating how new forms of organisation may be designed under different socio-economic systems (community, rather than transaction), and by identifying which types of report could underpin such systems (Bounfour, 2005, 2006). Even in the transaction system itself, new instruments must still be developed in order, for example, to develop a reporting structure specific to networked activities. On another level, understanding how ad-hoc communities (like Diasporas) create value from their intellectual resources may also prove to be a stimulating field for research.
Defining a status for ‘recognition assets’
Extending the philosophies developed by Ricoeur, Honneth and others, recognition may be considered as providing an important perspective from which to understand the dynamic of socio-economic systems. From that starting point, it is now possible to develop a new vision of intellectual assets, and particularly those that occur on, or beyond, the limits of traditional vertical organisations in networks or communities. The dynamic of socio-economic systems therefore requires a reassessment of the types of asset created and/or deployed in these new economic spaces. Recognition assets certainly constitute a key component.
Re-evaluation of intellectual property rights
The transformation now underway in business organisational forms naturally impacts on the important issue of intellectual property rights. In the transaction system, these are fundamentally instruments designed to generate exclusive value. But what should their status be in the community system? This issue must be refined further in order to examine its relevance under specific circumstances and for specific businesses. We are all familiar with the LINUX perspective. What types of principle should be applied for other areas of business… within the constraints of the community system, for example? Should the structure that has long been in place for vertically-organised companies be supplemented by introducing patenting procedures for communities structured with a greater or lesser degree of organisation? What is the impact of the various alternative options for innovation capabilities at global level (at national level, for example)? More specifically, what status should be accorded to recognition assets from the point of view of intellectual property rights?
Intellectual capital and demographics
The issue of demographics is naturally central to the problem of the intellectual capital of companies and organisations. Against the background of an ageing population, there are clear questions surrounding methods of innovation, the creation of intellectual assets and the ways in which value is created from those assets (the knowledge held by older people). The same is true of communication networks and their infrastructures (the ‘ubiquitous network’ concept originated in Japan (Kitamura, 2002)).
The instruments required to manage the intellectual capital of communities (open source etc.)
How should intellectual capital be managed in a context where networks and community emerge as the dominant form of organisation? Which management instruments should be designed and developed for companies, public-sector organisations and intermediate forms between the two (regions, departments and competitiveness clusters)? These are important questions in terms both of research and action. For example, how could the dominant principles of the ‘open source’ community be exported to other forms of community organisation, and what would be the effect on the process of managing ‘joint assets’?
Research & Development policy
Research and development policy in its traditional form (R&D expenditure and the Lisbon Agenda) is naturally called into question by the emergence of intellectual assets in public and private policymaking. The Chair is specifically committed to clarifying this issue on the basis that other forms of innovation are not necessarily taken into account by statistical systems.
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- Teece, D. (2000), Managing Intellectual Capital. Oxford University Press. Oxford.